Next farm bill: shift to rural development?

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As the next farm bill is crafted, it appears a shift from commodity programs to rural development will be a focus for the Obama administration.

Testifying before the House Agriculture Committee on Wednesday, USDA Secretary Tim Vilsack provided a set of five priorities for rural America: broadband access, renewable energy and bio-fuels, regional food systems and supply chains, forest restoration and private land conservation, and ecosystem market incentives.

“In your written testimony, under the heading ‘the importance and challenges of rural America and its future’ nowhere do you talk about the farmer or the safety net of production agriculture,” said an incredulous Oklahoma Rep. Frank Lucas, ranking member of the committee. “I worry that this is symbolic of an issue that’s becoming of much concern in the countryside. That is: does the (Obama) administration have a disconnect with rural America?

“Are you telling the committee that the administration’s key areas of emphasis in the next farm bill will be broadband, renewable energy, biofuels, regional food systems, supply chains, forest restoration, private land conservation and ecosystem market incentives? Are those really the primary issues where the administration will go in the next farm bill?”

Vilsack replied that the five priorities are “significant issues that need to be addressed (while) recognizing this committee will obviously focus on risk management tools, direct payment programs and the traditional safety net.

“I think it was important for us to expand the discussion, to understand and appreciate how important broadband is, how important potential ecosystem markets can be in terms of additional income sources for farm families … (and things) that are necessary for people to keep the farm. I think it’s important for us to see this as an expansion of the safety net, which is important to farm families.”

Lucas was not mollified. “So, can I assume that the USDA’s proposals for the next farm bill will look something like the budget submissions made during the appropriations process with proposed cuts in direct payments, crop insurance subsidies and most conservation programs? Will we see the types of proposals in the next farm bill that we see in the annual budget submission?”

Vilsack: “I think it’s important for us periodically to, sort of, recalibrate. There may be opportunity for us to utilize those resources in an effective way. … There are 60 million people who live in rural communities. Obviously … there’s a tremendous amount of work (in those areas) that needs to be done. … We will work with this committee on making sure, as best we can, to protect the baseline. I know (the committee needs that) to do your work.”

Lucas — who represents a district that was “the abyss of the Great Depression and the Dust Bowl of the 1930s” — asked Vilsack how many of the conservation programs “including EQIP, CSP, WRP and GRP actually have final rules in place?”

Under the 2008 farm bill, the USDA has rules “we’re working under,” said Vilsack. “We’re getting resources out the door. We’re in the process of finalizing the (rules). But it hasn’t stopped us from entering into contracts.

“In EQIP, for example, there are a substantial number of contracts — about 13 million acres and $1 billion being provided.”

Further, Vilsack claimed “737 rules and action steps” needed to be taken to implement the 2008 farm bill.

Lucas, clearly irritated, asked if the Obama administration’s aim is to turn rural America into a “bedroom community.”

Vilsack pushed back, saying the conservation programs would get more funding. At the same time, “the reality is we can create better-paying (jobs) in rural America — centers for energy production, for example, (like) bio-refineries, people who build them, those who maintain them, work at them. Those are good-paying jobs and they’d be sprinkled across the landscape.

“If you create broadband opportunities, not only would farmers and ranchers have real-time information but small businesses they, or their spouses, are operating could expand from local to global. That creates economic activity. … You can allow wealth to generate within the community. … This is about making rural areas vibrant places where young people, particularly, are anxious and interested in setting up their families and establishing a life.”

Dairy

The U.S. dairy industry continues to struggle and Minnesota Rep. Collin Peterson, committee chairman, asked Vilsack about the recent appointment of a dairy advisory board.

“There is a consensus … from most, if not all, regions of the country of dissatisfaction with the current (support) system,” said Vilsack. “Last year, there was a concerted effort by Congress and the (Obama) administration to try and respond by providing additional commodity purchases, by providing additional price support, by providing additional resources at the end of the year.”

Herds were reduced systematically, “and appropriately,” in the later part of 2009. If that had continued, “one assumes that prices would have continued to improve. … Unfortunately, what we’ve seen in the first part of 2010 is an increase in herd sizes. That is why the advisory committee is so intent on getting a process in place that will allow us to have predictability and stability.”

The USDA awaits the advisory board’s conclusions and, in the meantime “we’re focused on trying to expand credit opportunities. We are suggesting that some dairy operations are large enough to consider the possibility of using the Business and Industry Loan Program, which is often not thought of a vehicle for credit.”

Dairy producers have said a top priority is a mandatory, expanded price-reporting system for dairy products. Vilsack agreed with the need and estimated the cost of expanding the program will be about $2.5 million.

Biofuels

Kansas Rep. Jerry Moran wanted to know “about eligibility for Advanced Biofuels Assistance Program producer grants.” Kansas has several companies that, in Moran’s opinion, “should be eligible for the grants but aren’t 51 percent owned by U.S. citizens. … We’re in the process of excluding a company that uses Kansas biofuels and employs Kansas people. This is an important component of their financing.”

Vilsack said that particular eligibility requirement needs “rethinking” and “that’s on the front burner.”

As the growing season progresses, Moran also wanted to know about a Conservation Reserve Program (CRP) sign-up. “When will that sign-up occur? If the sign-up is in July or August, we probably need a short-term extension for land coming out of CRP.”

The USDA is “awaiting the additional environmental information that must be completed as a condition preceding the general sign-up,” said Vilsack. “Our hope is it is done expeditiously. We recognize the pressure that producers, landowners and we’re under to get this done as quickly as possible. I’m a bit concerned about committing to a specific month (for sign-up) … but we’re anxious to get this done quickly. As soon as the environmental work is done, we’ll be ready to move.”

Iowa Rep. Steve King was also keen for answers on biofuel policy. “We’re watching biodiesel plants across the country be mothballed and shut down. I think I counted 14 in Iowa. One is being dismantled and shipped to India.

“We’re waiting on Congress for a decision on the blenders credit,” continued King. “I think some in Congress don’t understand that millions of dollars have been invested to try and follow the government’s lead on renewable fuels. Now, (those in the biofuel industry) find their capital frozen or devalued while waiting for Congress to follow through.”

Action is “long overdue for us to address this and provide this vital industry … the tax extension,” said Vilsack. “It needs to have taken place yesterday. There has been some indication it will get done before Memorial Day. That would be my wish and hope.”

Cap and trade

King, pointing to “climate-gate” and the failed climate summit in Denmark, also asked Vilsack if his earlier views on climate science had changed.

“I have reviewed the science and it doesn’t fundamentally change my attitude about this,” replied Vilsack. “I deal with the consequences of (global warming) every day.

“A prime example is in the West with the bark beetle infestation. The reality is that because winters aren’t as severe as they once were, these beetles … survive the winter when they used to die. I’ve been told … there’s over 7 million acres impacted by this bark beetle. We expect 100,000 trees to fall daily for the next decade.”